The Managing Board and Supervisory Board of ABN AMRO Holding N.V. and the Board of Directors of Barclays PLC announced jointly this morning that agreement has been reached on the combination of ABN AMRO and Barclays for $91.16 billion, in the world's largest bank takeover.
In March hedge fund and major shareholder TCI announced in a letter to Dutch bank ABN Amro that they believe the bank is undervalued and should sell some of its assets, merge with another bank, or even sell off the whole business. ABN Amro is due to hold a shareholder meeting this week and each of the Boards has unanimously resolved to recommend this new transaction to its respective shareholders. The holding company of the combined group will be called Barclays PLC.
The merger was expected to be completed during the fourth quarter of this year, the banks said. As part of the deal, ABN Amro announced it was selling its U.S. unit, LaSalle Bank, to Bank of America Corp. for $21 billion in cash. Under the deal announced Monday, Barclays offered 36.25 euros ($49.25) for each ABN Amro share, slightly below Friday's closing price of 36.29 euros ($49.38).
"The proposed merger of ABN Amro and Barclays will create a strong and competitive combination for its clients with superior products and extensive distribution," the banks said in a statement. "The merged group is expected to generate significant and sustained future incremental earnings growth for shareholders."
Barclays CEO John Varley said the hedge fund shareholders faced a stark choice: Either deconstruct ABN Amro by opting for the competing consortium's bid, or form one of the world's largest banks by accepting Barclays takeover. TCI, the hedge fund that pushed for the bank's breakup, said it was studying the proposed deal.
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